CBIC has clarified in its circular that GST will continue on vouchers like marketing, customization or commission based distribution, as these come as additional services.
CBIC (Central Board of Indirect Taxes and Customs) has recently issued an important order, in which it has been clarified that gift cards and vouchers, whether they are trading margin or other types, will no longer come under goods or services. This means that GST (Goods and Services Tax) i.e. GST will no longer be levied on them.
This decision will remove the long-standing concerns regarding taxation on gift cards and vouchers. Because they are used extensively in corporate gifting and promotional activities.
However, CBIC has also clarified in its circular that GST will continue on vouchers like marketing, customization or commission based distribution, because these come as additional services.
Saurabh Agarwal, tax partner at EY, says, “It will be interesting to see whether the industry will try to find a way to get a refund of the GST paid after this decision. Overall, this decision is important for the industry as it will bring clarity about taxation and reduce unnecessary litigation.”
Earlier, the Karnataka Authority for Advance Rulings had also said in the Premier Sales Corporation case that vouchers can be treated as goods and can be taxed, but now after this order of CBIC, the issue has been resolved.
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